BBPA slams National Minimum Wage rules as confusing & outdated

The British Beer & Pub Association (BBPA) has today responded to a Department for Business, Energy & Industrial Strategy consultation on National Minimum Wage (NMW) rules regarding salaried workers and the operation of salary sacrifice schemes.

The consultation sought views on proposed changes to the NMW regulations and where employers felt NMW rules unfairly penalise them, without generating any benefits or protection for workers.

Brigid Simmonds, Chief Executive of the British Beer & Pub Association, said, “Working practices are very different today compared to when the National Minimum Wage legislation and regulations were first created. This is especially the case for the brewing and pub sectors, which work in an ever more flexible, agile environment where employees and employers increasingly seek a better work/life balance.

“For these reasons, it is not always easy to specify or record exact salaried working hours, making compliance with the current rules which set out annualised hours, rather than the weekly contracts often offered in pubs, difficult and meaning that they don’t always benefit the workers that they seek to protect.

“To avoid these issues, we have proposed that additional payment cycles for NMW employees should be brought in so that they match an employer’s own payment cycle. This will help with compliance by reducing confusion and complication, decreasing the risk of unintentional errors when it comes to NMW rules which can only be corrected within a week for those on weekly paid contract, rather than a month for those paid on longer contracts.

'If we are not careful employers will move away from offering weekly payments, which are often popular with employees, because of the danger of falling foul of current rules and all the reputational damage this can cause.'

Simmonds continued, “We have also proposed that employers should have the flexibility to choose a standard year for salary purposes that best suits their business. A consistent and transparent standard year that is defined by the employer offers the most benefit to both employers and employees, but this should not be set as a single national year.

“Salary sacrifice schemes should help to support the lowest earners, but the current system prevents some from taking advantage of some schemes, simply because their use would lead to the employee falling below the NMW rules.

'For example, a pub chef’s knives, which due to the chef’s skills and preference for the tools they use are often their own personal property, or an offer for employees to live in employer-owned accommodation, which can be a mutually beneficial arrangement. If an employee is on or just above the national minimum wage, it is almost impossible to offer salary sacrifice schemes like these.

“It’s clear that businesses from a wide range of industries and sectors are confused with the current NMW rules and a lack of consistency in its enforcement. This has resulted in responsible employers falling foul of the rules simply because of unintentional errors and misunderstandings.

'What’s needed to rectify this is sector-specific guidance from the Government, which existed for many years, but was removed for reasons of better regulation. We are disappointed that after considerable progress was made in collaboration with HMRC to develop new guidance, it was withdrawn without an explanation as to why.'

Simmonds concluded, “The Secretary of State, Greg Clark MP, has previously acknowledged that the current NMW regulations are an unnecessary burden and penalise employers. We are calling for an immediate and essential update of the rules to reflect modern work practices.”